Wonga to take on Western Union with new money transfers venture

Short-term lender Wonga is planning to foray into the mortgage lending and money transfers space, the Daily Telegraph has reported.

“You will absolutely see Wonga in areas where the traditional financial services players don’t deliver good value. We’ll do other stuff like payments and savings,” founder Errol Damelin told the newspaper. “We’ll probably do mortgages at some point. The mortgage market’s broken in the UK. It’s inefficiently priced.”

Damelin said that he is “impatient” to start the project and branded money transfer giant Western Union “immoral”. “To take £20 from somebody sending their own money to a relative where there is almost no risk,” he said.

In the past the company has been criticised for lending money at interest rates of more than 4000% but Wonga’s growth is impressive. The company reported a turnover of £74m and a profit of £16.6m in 2010. Last year, Wonga also topped the Tech Track 100, the Sunday Times index of the UK’s fastest-growing technology companies.

In a recent interview LondonlovesBusiness.com, Damelin said, “We haven’t been growing as fast as we possibly could. We’ve been growing in very controlled way. So if you look at our monthly numbers it’s pretty much a straight line for the last five years.”

Readers' comments (1)

Wonga targets desperate and unsophisticated people who cannot borrow elsewhere and do not realise how much interest they are being charged. In calling Western Union immoral, the words Pot and Kettle spring to mind.